How resources and wealth are distributed among the population has fundamental implications for welfare. When markets and institutions fail, power relationships between groups shape allocation of resources and yield to inefficient outcomes. These issues are particularly salient on the African continent. Economic inequalities between ethnic groups persist because state institutions are prone to capture by ethnic interests. Individuals or groups who hold political power often favour co-ethnics in the allocation of resources (‘ethnic favouritism’).

The researchers hypothesise that politicians engage in strategic interactions with traditional leaders, granting them control over agricultural land. The study analyses the relationship between electoral outcomes and the allocation of land and employment in African democracies, examining whether individuals of the same ethnicity as elected politicians enjoy a comparative advantage in the labour market, testing whether this effect is concentrated in the agricultural sector, and providing evidence on the role of ethnic chiefs in society.

This paper will offer the first analysis of the health of African democracies and its interaction with traditional forms of government, such as traditional chieftainship. It uncovers a potential new driver shaping the occupational choices in Africa where, as in most parts of the developing world, most individuals are still self-employed farmers involved in subsistence agriculture. The distortions that ethnic politics may introduce into these markets therefore has critical implications for the lives of hundreds of millions of individuals.

The Employment Effects of Ethnic Politics